Japan names academic Ueda as next central bank governor
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Loading... - Himari Saito
- 17 Feb 2023
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Japan's government named academic Kazuo Ueda as its pick to become next central bank governor, a surprise choice that could heighten the chance of an end to its unpopular yield control policy.
Ueda, a 71-year-old former Bank of Japan (BOJ) policy board member, will succeed incumbent Haruhiko Kuroda, whose second, five-year term ends on April 8, according to documents presented to parliament on Tuesday.
The leadership transition marks a historical end to Kuroda's decade-long monetary experiment that sought to shock the public out of a deflationary mindset, and could eventually align Japan with other major economies toward higher interest rates.
With inflation exceeding the BOJ's 2% target, Ueda faces the delicate task of normalising its prolonged ultra-easy policy that has drawn increasing public criticism for distorting market function and crushing bank margins.
Analysts expect Ueda, who had warned of the dangers of premature interest rate hikes in the past, to hold off on tightening monetary policy.
But he may be more keen than his predecessor to roll back yield curve control (YCC) - a complex framework combining negative short-term rates with a 0.5% bond yield cap - given his past comments flagging its potential flaws, analysts say.
"Ueda is likely to focus on theory and empirical analysis in guiding monetary policy," said Naomi Muguruma, senior market economist at Mitsubishi UFJ Morgan Stanley Securities.
"I don't think he will idly continue a policy that didn't work and showing increasing side-effects," she said.
The appointment of Ueda, which was first reported by the Nikkei newspaper and confirmed by Reuters on Friday, came as a surprise to many investors who expected the job to go to a career central banker like deputy governor Masayoshi Amamiya. Read More…
